To challenge or not?

In general, and subject to any local advice to the contrary, a party who is aggrieved by an award will do better to take the initiative and to mount an attack upon it, if legally possible, rather than adopt a passive attitude in order to resist recognition and enforcement later. First, there is a risk that by doing nothing the opportunity to challenge the award will be lost, either by lapse of time, by estoppel, or in some other way. Secondly, to take the initiative in such circumstances is generally a sound tactic, because a party who is genuinely aggrieved by an award naturally wishes to challenge it at the earliest possible opportunity. Such an attitude is more likely to impress the relevant national court (and the other party) than an attitude of passive resistance. It may also be a sensible course as a matter of law, since the grounds upon which an award may be challenged are usually wider than those upon which recognition and enforcement of an award may be resisted.

 

As to the possibility of using the award as a basis for negotiating a settlement, this is a course that is far more commonly adopted than is realised. The losing party is not without bargaining power. First, he may be able to point out to the winning party that there is a risk of the award being set aside by a national court, or of recognition and enforcement being refused. He can also point to the time, trouble, and expense involved in enforcement proceedings in what, for the winning party, is likely to be a foreign jurisdiction. He can also argue that immediate payment of a sum of money, even though it is less than the amount awarded, may be more attractive than payment of the full amount of the award at a much later date (even if interest is taken into account).

Source: Redfern and Hunter on International Arbitration